Spain 'at no point' on verge of economic rescue: Salgado

6th September 2011, Comments 0 comments

Spain has not been on the verge of needing a financial rescue at any point despite enduring market turmoil in August, Finance Minister Elena Salgado said on Tuesday.

She spoke shortly before a trade union leader retracted a claim that Prime Minister Jose Luis Rodriguez Zapatero had warned unions in August that Spain was close to needing a rescue package.

"At no point have we been on the verge of being rescued," Salgado told state radio RNE.

"Like other countries were suffered debt market tensions in August and that led to the ECB intervening, but since then we have been very far from a rescue," she said.

The rate for Spanish and Italian government bonds in August shot above six percent -- a borrowing rate widely judged to be unsustainable over the long term -- on concern over their ability to service their sovereign debt.

Debt markets calmed only after the European Central Bank intervened to buy Spanish and Italian government bonds.

Stock markets plunged on Monday on renewed doubts about action to stop the eurozone debt crisis, but they steadied a little on Tuesday.

"Yesterday a lack of confidence was generated again, and it is a circle we have to break out of together," Salgado said.

"We have to generate confidence, we have to integrate Europe more and resolve once and for all the question of Greece with this second assistance package," she added.

Ignacio Fernandez Toxo, leader of one of the principal unions, the Labour Union, told public TVE television on Monday that Zapatero had warned of an imminent rescue when he met with unions August 17.

But on Tuesday the union chief backpedalled on his version of Zapatero's comments.

"It was an unfortunate attempt to summarise the explanation of a meeting that was called urgently in a very delicate situation," Toxo said in an interview with Onda Cero.

"With the background of that meeting, I put together two words that in the literal sense were not expressed by the president of the government," he added. "I do not think Spain has been on the verge of a rescue, nor that it is at the moment."

© 2011 AFP

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